“House hacking” is a growing trend in the finance community, offering a path to financial flexibility and significant savings. This article explores how financially savvy individuals are using this strategy to reduce expenses and achieve greater financial freedom.
What is House Hacking?
House hacking involves living in a property while simultaneously generating income from it. This can be done by:
- Buying or renting a multi-family property and living in one unit while renting out the others
- Renting out spare rooms in your home to roommates
- Using short-term rental platforms like Airbnb to rent out portions of your living space
The goal is to have other people’s rent payments cover most or all of your housing costs, allowing you to live nearly rent-free or pay off your mortgage faster.
Why House Hacking is Gaining Popularity
- Financial Benefits:
- Reduced housing costs
- Faster mortgage payoff
- Potential for building equity
- Tax advantages for property owners
- Flexibility:
- Easier entry into real estate investing
- Ability to live in desirable areas at a lower cost
- Potential for nomadic or remote work lifestyles
- Earlier Path to Financial Independence:
- Increased savings rate
- More funds available for investing
- Potential for passive income
Success Stories
Several finance bloggers, YouTubers, and authors have popularized house hacking:
- Graham Stephan: Real estate agent and investor who achieved millionaire status in his 20s through house hacking and frugal living.
- Mike Rosehart: Canada’s youngest self-made early retiree at age 24, credited to acquiring 15 properties and embracing frugality.
- Alan Corey: Author of “Million Bucks by 30,” who used house hacking in New York City to build wealth on a modest salary.
- Grant Sabatier: Went from $2.26 to millionaire in 5 years, partly through house hacking strategies.
Practical Advice from House Hackers
Nick Arsendorf:
- Rents a two-bedroom apartment and subleases the spare room
- Lives in a three-bedroom house, renting out two rooms to cover most expenses
Travis Pullin:
- Recommends finding a property with the most bedrooms for the lowest price
- Suggests renting to people you know and trust
- Emphasizes the importance of adequate parking . Josh Hastings:
- Rented out two rooms in his townhome for seven years
- Offset costs while providing affordable housing for friends
- Suggests considering room rentals even if married
How to Get Started with House Hacking
- Research local real estate markets and rental rates
- Analyze potential properties for house hacking opportunities
- Consider your comfort level with sharing living space
- Understand local laws and regulations regarding rentals
- Create a solid financial plan and budget
- Screen potential tenants or roommates carefully
- Set clear expectations and agreements with co-habitants
Conclusion
House hacking offers a powerful strategy for reducing housing costs and accelerating financial goals. With low interest rates, remote work opportunities, and platforms like Airbnb, it’s becoming increasingly accessible. When done correctly, house hacking can provide not only financial benefits but also increased flexibility and freedom.
For more information, follow MoneyNotSpent and explore resources from successful house hackers mentioned in this article.
